hhgregg, Inc. (HGG), which operates as a specialty retailer of consumer electronics, home appliances, and related services, is all set to unveil its fourth quarter and fiscal year 2012 results on May 23, 2012, before the market opens. The Zacks Consensus Estimate for the fourth quarter is 37 cents (year-over-year decrease of 38%), while the Zacks Consensus Revenue Estimate is $647 million (year-over-year decrease of 22%).
The Zacks Consensus Estimate for the fiscal year 2012 is $1.09 per share (year-over-year decrease of 8%), which is within the company’s guidance range of $1.05 – $1.15 per share. The Zacks Consensus Revenue Estimate for the fiscal year 2012 is $2.5 billion (year-over-year decrease of 22%).
Third Quarter Overview
hhgregg delivered third-quarter 2012 earnings of 60 cents per share, in line with the Zacks Consensus Estimate. Earnings dipped 9.1% from the year-ago quarter. hhgregg’s net sales rose 26.9% to $829.5 million in the reported quarter. Same-store sales climbed on the back of growth in the appliance and the home office categories, partially offset by declines in the video and other categories.
(Read our full coverage on this earnings report: Higher SG&A Drags Hhgregg’s Profits).
Agreement of Estimates Revision
Over the past 7 days, all the 14 analysts providing estimates on hhgregg have left their earnings estimates for the fourth quarter of 2012 unchanged. Similarly, earnings estimates were unmoved for the fiscal 2012 by 13 analysts providing estimates over the same period.
Over the past 30 days, only one of the 14 analysts providing estimates on hhgregg has revised his earnings estimate for the fourth quarter of 2012, that too in a negative direction. Earnings estimates for 2012 were also decreased by one analyst out of 13 analysts over the last 30 days.
We believe that the downward revision in estimates is due to the prevailing industry-wide pressure on sales and margins within the video category. hhgregg also fears the slowdown in its consumer electronics categories, as the company has seen the same thing happening to its peer companies including Best Buy Company, Inc. (BBY), Sears Holding Corp. (SHLD), Target Corp. (TGT) and Costco Wholesale Corp. (COST).
Magnitude of Estimate Revisions
The earnings estimate for the fourth quarter 2012 has remained static over the past 7 days and 30 days at 37 cents per share. The earnings estimate for fiscal year 2012 has declined by a penny from $1.10 per share to $1.09 per share, over the past 30 days.
Surprise History
hhgregg has surpassed earnings estimates in two of the last four quarters, with break-even in one quarter. The company has recorded a maximum positive surprise of 166.67%. On average, the earnings surprise was a positive 100.58%.
Our Recommendation
hhgregg thus has a Zacks #4 Rank (short-term ‘Sell’ rating) on the stock. Over the long term, we maintain a Neutral outlook on hhgregg.
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